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Most Important Aspects to an MMO Economy?

Hello.

I've spent some years being a merchant on various MMO's, and I've been wanting to branch out and find new MMOs to merch. I figured the best way I could do that is if I, through the assistance of the users on this forum, created a list of MMOs focused on their economic and merching aspects.

One of the quickest ways to know what a merching experience will be like is through knowing some key aspects of the in-game economy. There are some features and traits of MMO economies which have profound impacts on merching gameplay. Some clear examples would be auction houses, free/restricted trade, and playerbase.

I'd like this thread to be a brainstorming thread. What do all of you think are some of the most economy-defining characteristics of MMO's?

The most economy-defining characteristic of any MMO is the inherit economic values of the items themselves and whether or not they are easily manipulated as the foundation of MMO economies is 99% of the time going to be a "Supply & Demand" system whereby an item's price will fluctuate depending on this principle.

But to address your immediate list of principles...
1. I don't believe that an auction house is at all necessary for an economy to function and may discourage differentiations in item prices due to standardization whereby players are unable to charge differing prices due to either A)Being unable to sell the item due to another player selling it cheaper or Not wanting to sell an item cheaper due to the knowledge that they won't get the same value as another player from the same item. Personally, i have seen many games which have a thriving player-based economy without an Auction House such as Path of Exile. (I will probably use Path of Exile quite often in relation to this topic as i believe their economy system is absolutely stellar)

2.Market Freedom, this one is really simple, let people trade any non-essential items as they wish... Runescape showed us what happens when you take away this freedom and the results are disastrous.

3.Playerbase : Pretty simple, the more players, the faster the rate at which items are being introduced to the game and the faster items become "devalued" so as a result, you need to add new content which is better than that which is already existing at a pace relative to the amount of players OR have a mechanic that removes items to stabilize the supply (Eg. Item's disappear after being left on the ground for a period of time, Path of Exile removes items from Hardcore leagues as players consume and die with gear equipped, etc etc)

4. Currencies: Most games have two currencies, gold (or something of that nature) and the items themselves (which need to have some value to the player for them to work). Path of Exile is a single currency game (with items being the only currency) and it has done quite well so having "gold" is obviously not necessary as long as there is at least one form of currency present.

5. Black Markets: Black Markets are bad because they upset the natural cycle of the economy, Items > Currency> Items so for example, if these Black Markets hoard currency, suddenly everyone has a whole bunch of items they can't do anything with and same holds true for if they hoard items. This is why gambling within games tends to be a quickly dealt with offense due to the hosts of such activities hoarding currencies. But... Impatience combined with a need will result in some people handing over the cash to these Black Markets in order to progress faster unfortunately ;_;

6. Player Owned Shops: I prefer these as opposed to Auction Houses because it actually requires effort to standardize the price of items, common items will tend to be standardized however rare items will usually not have concurrent sales which allows the value to be reset and be set by the next seller.

7. Item Diversity: More items means more merchanting opportunities due to higher chances of fluctuating prices. Besides... More items is always good as long as you avoid making current items completely redundant and turning them into "vendor trash".

8. Inflation Tendencies: These are REALLY easy to pick up on if you know what you're looking for! Oh? There's a new event being added to the game where you need THIS item? So more people will need this item and due to the "Supply-Demand" principle... That would mean the price will rise! Of course, analyzing the market personally, walking around the main trading hub and seeing what people are selling is also a good method. If more people are selling the same item at once then chances are the price will steadily get lower as a result of people's impatience and need to sell the item to return to whatever activity they wish to do. Likewise, if nobody is selling the item then it provides a good opportunity to sell it and set your own price before competition arrives. (This is why we encourage competition with businesses IRL, it's good so businesses can't squeeze every dime and nickel out of consumers)

9. MMO Age: Personally i don't believe this is a huge factor when dealing with MMO economies as long as, once again, they have measures in place to remove items from the game so the market doesn't get saturated.

10. Wealth Stratification: It is important to balance allowing players to get rich as a result of hard work and maintaining the equilibrium between players, if one player has substantially more wealth than other players then that gives them at least partial control of the economy and that is exactly what you DO NOT want to happen. An economy that is too easily manipulated is a "weak economy" and it just takes that one incredibly rich player to tear an economy to pieces. (Imagine if that player decided to buy all the rare items obtainable from the first dungeon in the game. This would drive the price to a point where that item becomes unobtainable by players who actually need it and will thus make the item worthless until the price is set to a point where people are willing to purchase it.

It's amazing that this economic instinct is so natural to us as humans that we, without any prior business/retail knowledge can understand the mechanics of trade and make use of them to progress ourselves within our games. It just proves that we subconsciously analyze the principles of the world around us without even meaning to ^^

So? What is the main economy-defining characteristic of everything ranging from MMOs to life itself?
***SUPPLY & DEMAND***

Interesting read, thanks! It confirms a lot of what I already thought about that specific topic.

Originally Posted by ManiacShinzo

So? What is the main economy-defining characteristic of everything ranging from MMOs to life itself?
***SUPPLY & DEMAND***

Thanks for the post, but this isn't exactly the kind of response I was looking for. I was hoping for a discussion about what features/traits can be found on MMOs have that have the most significant impact on the MMO's economy in regards to the level of impact a feature can have.

For instance, because of the Grand Exchange on Runescape, all prices are very well set-in-stone, and sales/purchases take very little effort. Contrast this with a game that relies solely on player-owned shops, in which case, prices are not set-in-stone and you have to take what you can get.

This is basically what I consider, since black market determines prices, playerbase demand determines black market supply, and auction house makes the economy player-driven. If there is no auction house then I ignore the game's economy.

I'd agree those are the biggest ones, but I would add one more to that list: market freedom. Then again, market freedom is almost a given (restricted trade almost never exists.) Perhaps in an MMO Economy list, restricted trade would be noted specifically if it exists, but free markets would not be.

Would you be willing to make a short list of currently-active MMO's that have auction houses/trade systems that you have some experience with (as well as a short description of some of their specific traits)? Thanks.

Would you be willing to make a short list of currently-active MMO's that have auction houses/trade systems that you have some experience with (as well as a short description of some of their specific traits)? Thanks.

Not sure if you're asking OP but I'm gonna jump-in here:
Entropia Universe - game is run by a Swedish bank and allows you to withdraw in-game currency as €. Lots of market-competition. I controlled the supply of five different items (I will not say here...)
Runescape - extremely high playerbase with extremely low system requirements. Jagex recently introduced more complex anti-botting algorithms to prevent economy inflation.
Dragon Nest - resell the rarest loots to the gold buyers so that they can break their gear again trying to get a +13!
World of Warcraft
EVE Online - amazing economy. Extremely competitive. Full-loot PvP.
Guild Wars 2 - auction house was broken at launch. If you listed over 30 items the next items you listed would disappear forever. And only 10% of players could access auction house. Other 90% were locked-out.

Not sure if you're asking OP but I'm gonna jump-in here:
Entropia Universe - game is run by a Swedish bank and allows you to withdraw in-game currency as €. Lots of market-competition. I controlled the supply of five different items (I will not say here...)
Runescape - extremely high playerbase with extremely low system requirements. Jagex recently introduced more complex anti-botting algorithms to prevent economy inflation.
Dragon Nest - resell the rarest loots to the gold buyers so that they can break their gear again trying to get a +13!
World of Warcraft
EVE Online - amazing economy. Extremely competitive. Full-loot PvP.
Guild Wars 2 - auction house was broken at launch. If you listed over 30 items the next items you listed would disappear forever. And only 10% of players could access auction house. Other 90% were locked-out.

Thanks for the post, but I'm more talking about auction house intricacies in that post.

EX: Runescape, grand exchange system. Functions like a stock market where you buy/sell up to 6 items at once. No taxes, and relatively low profit margins (current market prices are listed), but fast movement of goods and extreme ease of doing business.

Although, the legalized gold farming aspect of Entropia Universe is very useful. I honestly think the "problems" associated with gold farming have more to do with the methods in which gold is attained as opposed to buying/selling for real money. In other words, it's botting, money exploits, character hacking, or dupes that hurt online economies, not real life exchange.

I honestly think the "problems" associated with gold farming have more to do with the methods in which gold is attained as opposed to buying/selling for real money. In other words, it's botting, money exploits, character hacking, or dupes that hurt online economies, not real life exchange.

What about places where the minimum wage is $1-2/hr? Players in China pay their subscription and farm their gold by hand, yet it's still a bannable offense to sell.

This is basically what I consider, since black market determines prices, playerbase demand determines black market supply, and auction house makes the economy player-driven. If there is no auction house then I ignore the game's economy.

If you’ve created a context that people care about, some of them will pay you. In other words, if you have lots of users it’s because they care about what you’ve created. If they care, at least some proportion will buy virtual goods from you. I’m not going to spend any more time on this, as it’s pretty self-explanatory.

Why can't big franchises think like this? So many games are successful because they VALUE THE PLAYERBASE. Not everything has to be a cash-shop driven facebook app.

Originally Posted by Matt Mihaly

At the same time as we were getting complaints from non-paying users about being unable to progress (since this required credits that they could not get), some of our credit-buying users were asking us to sell them gold (the in-game currency one gets from completing quests, killing monsters, etc). We steadfastly refused as we didn’t want to mandate an exchange rate and didn’t like the idea of the endless ‘faucet’ of gold that would flow into the game (potentially causing major inflation problems), though this was a little painful. In the short-term, clearly we’d have made money by selling gold to players ourselves. In the long-term, I think it would have severely damaged the game.

Then it occurred to me, in early ‘99: Everyone can get what he wants here. Simply turn credits into a currency and allow players to trade one currency (credits) for another (gold). Everybody wins!

Playerbase was the first thing that came to mind for me. So many economic issues can be fixed with a stable supply and demand ratio. To that effect, I believe every game should be 1 single server so that every single person who plays the game would have to work with the same economy as everyone else.

The first virtual goods to be sold were items for use in MUDs, early, text-only online games. This practice continued with the advent of MMORPGs. Players would sell virtual goods, such as swords, coins, potions, and avatars, to each other in the informal sector. While this practice is forbidden in most blockbuster online games, such as World of Warcraft,[7] many online games now derive revenue from the sale of virtual goods.[8]

When Iron Realms Entertainment began auctioning items to players of its MUD, Achaea, Dreams of Divine Lands, in 1998, it became the first company to profit from the sale of virtual goods.[9]